An American Retailer Purchased 100 Pairs of Shoes from a Company

question 101

Multiple Choice

An American retailer purchased 100 pairs of shoes from a company in Mexico in the second quarter of 2016 but does not sell them to a consumer until the third quarter of 2016.In which quarter(s) does(do) the value of the shoes add to U.S.GDP?

• A)the second and third quarters
• B)the second quarter but not the third quarter
• C)the third but not the second quarter
• D)neither the second nor the third quarter

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Definitions:

Tax

Compulsory financial obligation or different form of levy placed on a taxpayer by a government entity to finance public spending.

Excise Tax

A tax imposed on specific goods, services, or activities within a country, often levied on items like tobacco, alcohol, and gasoline to discourage their use or generate revenue.

Deadweight Losses

Economic inefficiencies that occur when the equilibrium in a market is not achieved or is distorted, typically resulting in lost welfare or inefficiency.

Ability-to-Pay Principle

A taxation principle that suggests taxes should be levied according to an individual's or entity's ability to pay, implying those with higher income should pay more taxes.